Omaxe Ltd launches fixed deposits for 6 month to 3 year period

Omaxe Limited has launched fixed deposits for periods ranging from six months to three years. The company is planning to raise up to Rs 250 crores through these fixed deposits. The minimum amount of investment is Rs 25,000 and in multiples of Rs 1,000 thereafter. Omaxe Limited is into real estate development with a focus on Tier 2 and Tier 3 cities.

It has a presence in 12 states across 39 cities. At the moment, it has 42 ongoing projects, comprising of 16 group housing, 17 Integrated Townships, 7 shopping malls and commercial complex and 2 Hotels having value of approximately Rs 18,600 crores.

Product

Interest on the fixed deposit will be paid quarterly, annually or on a cumulative basis. For a six month fixed deposit you will get 11.50%, a one year deposit you will get 12%, for two years 12.25% and for three years 12.50%. You will receive post dated interest payment cheques

Why invest?

The interest rate of 12.5% pa is higher by 250-3000 basis points than that offered by most banks. The company is profit making and tt posted a net profit of Rs 62.90 crore for the year ended March 2012.

Why not to invest?

Company fixed deposits are unsecured and illiquid. Interest income from company fixed deposits are taxable and for those in the highest tax bracket the post tax return works out to a mere 8.64%. The company operates in the real estate segment, which carries higher risk. As of December 2012, 57% of the promoter shareholding is pledged.